ROCKLAND, Maine — A 63-year-old businessman admitted Thursday that he had collected but failed to turn over to the state sales taxes paid by customers for decades.
Ronald Pinkham entered guilty pleas in Knox County Superior Court to felony theft and a misdemeanor count of failure to turn over sales tax receipts. The prosecutor and judge, however, both acknowledged that Pinkham had been extremely cooperative since state revenue service officials accidentally discovered his business on the Web.
In exchange for his cooperation, the felony charge could be lowered to a misdemeanor when he is back in court in a year for sentencing. Under terms of the deferred disposition agreed to by the attorney general’s office and defense, Pinkham could serve less than 180 days in jail.
Assistant Attorney General Gregg Bernstein said that a Maine State Revenue agent came upon Pinkham’s business — Woodsound Studio in Rockport — by accident online. Bernstein said the agency then found that Woodsound was not on a list of businesses that collect and pay sales taxes to the state.
Pinkham, who lives in Lincolnville, has operated the music instrument making store in the Rockport village of Glen Cove since the 1970s. Bernstein said that since at least the 1980s Pinkham has collected sales taxes from customers but deposited that money in his own accounts for his personal use rather than submitting the funds to the state. The amount of uncollected taxes and interest totaled more than $139,000, the prosecutor said. A statute of limitations restricts criminal prosecution in tax cases that go beyond six years but does not prevent the state from seeking repayment in civil suits.
Bernstein said that about $38,000 is considered money owed under the criminal cases while another nearly $102,000 is considered owed under civil laws from previous years.
If Pinkham repays the $38,000 within 12 months, the state will ask for no more than 180 days in jail, under the deferred disposition agreement. The defense will be able argue for less jail time.
Pinkham paid $19,000 on Thursday, but if the remainder of the $38,000 is not repaid within a year, the agreement calls for a 364 day jail term with all but 270 days suspended.
Defense attorney Eric “Rick” Morse said Pinkham took immediate and full responsibility when he was first contacted by the revenue service. He has cooperated fully and wants to repay the full amount — including the civil part of the case.
“He wants to make it right,” Morse said.
Bernstein said Pinkham had told revenue service officials that he had been reluctant to advertise on the Web because he had not been paying the sales taxes.
Justice Jeffrey Hjelm said he was struck by Pinkham’s extraordinary cooperation with the state.
The Pinkham hearing was immediately followed in court by guilty pleas by a 37-year-old commercial fisherman from Rockland for not paying his income taxes for three years.
Steven W. Ward Jr. pleaded guilty to failure to pay state income taxes and failure to file state income tax returns in 2005, 2006 and 2007.
Bernstein, who also prosecuted this case, said Ward also did not file tax returns in 2002, 2003 and 2004. Those cases are not criminal matters because the statute of limitations has passed.
The plea agreement reached with the defense calls for 180 days in jail with all but 30 days suspended. The 30 days is a cap and the defense can argue for less jail time.
The sentencing has been put off until late March. Defense attorney Peter Rodway said the postponement of sentencing will allow Ward to go out scallop fishing when the season begins March 1 so that he can pay off the $11,887 in state income taxes owed for the three years cited in the criminal complaint.